Finding 1123799 (2024-003)

Finding Number: 2024-003 Agency: Department of Health & Human Services Federal Program: Maternal and Child Health Services Block Grants to the States ALN: 93.994 Compliance Requirement: Earmarking Category: Material Weakness in Internal Control over Compliance Criteria 45 CFR sections 92.20(a) and (b) (1) to (4) establish that: a) A State must expend and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be enough to, 1. Permit preparation of reports required by this part and the statutes authorizing the grant, and 2. Permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. b) The financial management systems of other grantees and subgrantees must meet the following standards: 1. Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. 2. Budget control. Actual expenditures or outlays must be compared with budgeted amounts for each grant or subgrant. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required in the grant or subgrant agreement. if unit cost data are required, estimates based on available documentation will be accepted whenever possible. Condition We noted the following deficiencies related to the grant awards B04MC47443: a. The PRDH does not segregate financial records sufficiently in order to permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the percentage restrictions of the grant award. b. We could not evaluate if the program is in compliance with the established earmarking requirements since the expenses were recorded for each of the award components and not the earmarking activity. Cause This situation occurs because the accounting records currently used by the PRDH do not have a reliable system to account for funds awarded to them. The chart of accounts in the financial system is not sufficiently expanded to account for each of the earmark requirements. Effect The PRDH could exceed the established expenditures limits per activity for the grant award. Noncompliance with the earmarking requirements could lead to significant administrative sanctions by the grantor, including reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve program objectives. Questioned Costs None Perspective Information Finding represents a significant problem. The agency will review internal controls to ensure that comply with federal government requirements. Prior Year Audit Finding 2023-004 Recommendation The PRDH must expand the chart of accounts in order to account for the amounts claimed for administrative expenditures independently. This expansion would permit the tracing of funds to a level of expenditure to establish that such funds have not been used in violation of the restrictions and prohibitions of the program as defined in 42 USC 705(a)(3). Also, payroll expenses must be recorded into each of the corresponding program activities, as follows: a) Preventive and primary care services for children. b) Services for children with special health care needs. Views of Responsible Officials PRDOH agrees with the finding. PRDOH has fixed the segregation of financial record, we already have the system in place in People Soft 8.4 in which permit the tracing of the funds to the level of expenditures that will be adequate. Responsible Officials Dr. Manuel Vargas Bernier Program Director 787-765-2929 ext. 4583 Mrs. Diana Ferrer Rivera Senior Accountant 787-765-2929 ext. 4551 Mrs. Lydia Magaly Cabrera Accountant 787-765-2929 ext. 4587 Estimate Date of Completion The process is in place for the grants that start for the fiscal year 2024-2025.